VIPIN KHOSLA vs. C I T , CHANDIGARH AND ANR.

PDF · subscribers
ITA/381/2007HC Punjab & HaryanaPHHC01073080200729 March 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law is answered against the assessee and dismissed the appeal. The Tribunal's finding that the assessee deliberately concealed particulars of income by not furnishing true facts until the inquiry started was upheld. The Tribunal observed that the assessee did not maintain regular books of account and the claim of bona fide was not established prior to the department's investigation. The onus was on the assessee to prove that there was no concealment or furnishing of inaccurate particulars, which the assessee failed to discharge. Furthermore, the assessee's counsel could not demonstrate that the addition of Rs. 1,51,000 was covered under the Kar Vivad Samadhan Scheme (KVSS). The Court found no illegality or perversity in the Tribunal's findings. Therefore, the penalty imposed under Section 271(1)(c) was justified.

What were the facts?

The assessee, Vipin Khosla, is in appeal before the High Court against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 1991-92. The dispute concerns the imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961, on an amount of Rs. 1,51,000. The assessee had invested Rs. 10,08,000 in booking nine vehicles, which was not disclosed to the Income Tax Department. The bookings were cancelled, and during investigation, this fact came to light. The assessee initially surrendered Rs. 6,50,000 but later retracted. The Assessing Officer made an addition of Rs. 8,68,000. The CIT(A) sustained an addition of Rs. 2,68,000. The Revenue appealed to the ITAT, which sustained the addition of Rs. 2,68,000 and made a further addition of Rs. 1,51,000. Penalty proceedings were initiated, and a penalty of Rs. 1,85,212 was imposed. The Assessing Officer noted that tax was paid on Rs. 2,68,000 under the Kar Vivad Samadhan Scheme (KVSS), but the additional Rs. 1,51,000 was not covered. The CIT(A) deleted the penalty, but the ITAT reversed this order, leading to the present appeal.

What were the issues?

1. Whether, in the facts and circumstances of the case, penalty proceedings could lie when a disclosure made under the Kar Vivad Samadhan Scheme (KVSS) for the same income stood accepted? (Question of law turning on the interpretation of KVSS provisions and their impact on penalty proceedings). Assessee's Contention: The assessee's primary contention, implied by the question of law, is that if income was disclosed and tax paid under KVSS, penalty proceedings for that income should not be initiated or sustained. The assessee implicitly argues that the Rs. 1,51,000 addition should have been covered by the KVSS disclosure. Revenue's Contention: The Revenue's contention, supported by the ITAT's findings, is that the assessee deliberately concealed particulars of income by not disclosing the investment in car bookings until the inquiry started. The Revenue argues that the Rs. 1,51,000 addition was not covered under the KVSS, and the assessee failed to discharge the onus of proving no concealment. The Revenue relies on various High Court and Tribunal decisions to support the imposition of penalty in cases of concealment and failure to discharge onus.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
Income Tax Appeal No. 381 of 2007 -1- , t1 / ... IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH, Income Tax Appeal No. 381 of'2007 Date of decision: 29,-3.2011 Vipin t<hosla ---Appellant Versus Commissioner of Income Tax, Chandigarh and another ~," --- Respondents CORAM: HON'BlE MR. JUSTICE ADARSH KUMAR GOEl HON'BlE MR. JUSTICE AJAY KUMAR MITTAl Present: Mr. Akshay Shan, Advocate for the appellant-assessee. Ms. Urvashi Dhugga, Senior Standing Counsel for the respondent-Revenwe. AJAY KUMAR MITTAL, J. The paper-book of this case has not been received from the concerned Branch as the same is said to have been burnt in the fire incident that took place in the premises of this Court on the night of 30th January, 2011. learned counsel for the appellant has made available two copies of paper-book to the Court for reconstruction of the file. 'The said copies are taken on record and the file of the appeal is treated as,having . been reconstructed. 2. This appeal under Section 260A of the Income-Tax 'Act, 1961 (for short "the Act") has been filed by the assessee against the order dated 9.4.2007, passed by the Income Tax Appellate Tribuhal Chandigarn --_c_cc_-- ----- Income Tax Appeal No. 381 of 2007 -2- c...... k"""" Bench 'A', Chandigarh (in short "the Tribunal") In ITA No. 558/CHANDII2005, relating to th~ assessment year 1991-92. 3. The appeal was admitted by this Court for determination of the following substantial question of law: "Whether in the facts and circumstances of the case penalty proceedings could lie when a disclosure made under the Kar ~""" Vivad Samadhan Scheme, for the same income, stood ~ "'~'II .".,JI:) ".,) accepted?" 4. Since the dispute herein is with regard to justification of imposition of penalty on Rs. 1,51,000/-, only the facts relevant for determination of that controversy are noticed which, as narrated in the appeal, are that the assessee, who claimed to be in the business of sale 'c'c"" and purchase of cars, admittedly, made investment of an amount of Rs. 10,08,000/- in the shape of booking of nine vehicles in the name of different persons. The amount so invested by the assessee was not "') ;'? "'- """'\ ..,J disclosed to the Income Tax Department. The bookings so made were got cancelled by the assessee on 6.3.1991 and during investigation, the above fact came to light. The 'assessee, however, subject to the conditions of imposing no penalty on him and not initiating prosecution against him, surrendered an amount of Rs. 6,50,000/- in his account, but later on retracted from his stand. The assessing officer made an addition of Rs. 8,68,000/- and aggrieved thereby, the assessee preferred appeal before the Commissioner of Income-tax (Appeals) [in short "CIT(A)"].The CIT(A) sustained addition of Rs. 2,68,0001- only, as unexplained , investment. The Revenue challenged the order of the CIT(A) before the Tribunal. The Tribunal accepted the plea of the Revenue and while sustaining addition of Rs. 2,68',0001-,made further addition of an amount !iI ._~-- ..~. ". ., .Acome Tax Appeal No. 381 of 2007 -3- of Rs. 1,51,0001-. Proceedings under Section 271 (1)(c) of the Act were initiated against the assessee for imposition of penalty for concealing the particulars of income. The assessee was held liable for penalty. I '1 I r Accordingly an amount of Rs. 1,85,2121- was imposed as penalty on the I . I asiessee by the assessing officer, by order dated 28.3.2004. The Ii assessing officer while imposing penalty on concealed income of Rs. I- ~ :::» 0u :I: C)- ::I: <C z~ ~ <C ::I: ~ aJ <C.,z=> c.. 1,51,0001- recorded that the assessee under the 'Kar Vivad Sam?dhan I Scheme (KVSS) had paid tax on Rs. 2,68,0001-, which was the addition sustained by the CIT(A) and no penalty was leviable thereon. However, . / the Tribunal had increased the disallowance from Rs. 2,68,0001- to Rs. 4,19,0001- and, therefore, addition of Rs. 1,51,0001- was not covered under the KVSS. The CIT(A),however, deleted the penalty by o'rder dated 17.3.2005, in the appeal preferred by the assessee. The Revenue went in appeal before the Tribunal. The Tribunal after consideration of the matter, recorded a finding that it was a case of imposition of penalty and accordingly, by the order under appeal reversed the order of the CIT(A) and this is how the assessee is in,appeal before this Court. 5. We have heard learned counsel for the parties and perused . , the record. 6. The only point for determination in this case is,' whether the penalty imposed on the assessee, under Section 211 (1)(c) of, the Act on Rs. 1,51,0001- for concealment of income was justified? 7. As noticed earlier, the penalty imposed initiallywas deleted by , the CIT(A), but the said order having been reversed by the Tribunal, thereby restoring the order of penalty is the only subject matter of this appeal at the instance of the Revenue. Here we would first notice the findings of the Tribunal recorded in the above context which read thus: '" ) ) ) \,,"" ~.'" " ", ,0} ~" " '-'~-~ ' 'me Tax ADDeal No. 381 of 2007 -4- , "4. Before coming to any conclusion, we are supposed to see whether the assessee concealed income or furnished inaccurate particulars of income. As Istated qbove, the assessee declared Rs. 1,86,370/- in its income which was assessed at Rs. 10,62,355/- under Section 143(3) ot the Act. There is no dispute to the fact that the assessee invested the amount of Rs. 10,08,000/- in the booking of nine vehicles in the bogus names which was not disclosed to the department. The assessee offered Rs. 6,50,000/- while making 1:he statement, to be added to his income. On a specific query from the Bench whether the assessee maintained its regular books, it was accepted that accounts were not maintained by the assessee. In such a situation another question arises whether the claim of the assessee was bona fide prior to investigation by the department, the obvious reply is ' NO' because till the date of starting of enquiry, no returns were furnished by the asse&see mentioning the investmen,t in booking of the cars. Therefore, it can be said that the assessee deliberately concealed the particulars of income by I not furnishing the true facts. In such a situation, it can be said / that the assessee deliberately defied the provisions of law. , The decision of the Chandigarh Bench of the Trib~nal in the case of Lalit Jain Vs. ITO (ITA No. 674/Chandi/2006 order dated 29.12.2006) wherein one of us (A.M.) is signatory to the

order clearly comes to the rescue of the revenue because onus is on the assessee to prove with positive evidence that there is no concealment of income or furnishing of inaccurate

Itf :r r FI I .-a:: :::) 0u ::r: t')-J: ;«:Z«>- ~ ,~ :L: .~ :)J«''''''') :Z .=> ~:l.. .__n_--- eal No. 381 of 2007 -5- particulars. Decision of the Chandigarh Bench of the Tribunal in the case of Mis. Malwa S:xpress Highway Private Ltd. vs. - . ACIT (ITA No. 618/Chandi/2006 order dated 29.12.2006) also goes in favour of the revenue. The decision of 'the Hon'ble Kerala High Court in the case of ITO VS. 8abu Bhal Hem Chand Saha (246 ITR 677) is also worth mentioning wherein it was held: "That the burden was on the assessee to show that there was no concealment of income and hence he was not liable for penalty. Since the ohus of pr()of was on the assessee, the Tribunal should have found whether the onus was discharged by the assessee. The Tribunal had exercised the power wrongly by holding 'that though there was a change in the assessee's explanation that could not render him liable for penal actio!}. The order had to be set aside."

5.

In the present case :also the assessee has not discharged his onus by proving th~ fact that clain;1of the assessee was bona fide further fortifies the case of the revenue. The Hon'ble discharge the onus which was laid upon it to explain' the cash credit, the imposition of penalty was held to be valid further fortifies the case of the revenue. The decision of the Hon'ble . Gujarat High Court in the case of A.M. Saha & Co. vs. CIT (238 ITR 415) (Guj.) wherein the levy of penalty was held to be valid further fortifies the case of the,revenue. 'Similar is the .',*""<.0 ,"'~x " 1 al No. 381 of 2007 -6- (P&H) wherein the assessee maintained two sets of accounts and had not shown its full income in its return, the levy of penalty was held to be valid by the Hon'ble Juri ictional High Court."

8.

A perusal of the .order of the Tribunal would go to shoyv that for -- reversing the order of the CIT(A), the Tribunal considered all the factors ~ ::> :) ..) and ultimately, concluded that the claim of the assessee was not bona fide as no returns were furnished by the assessee mentioning the investment ::') ," in the booking of the cars till the day the inquiry into the matter was ,.".. started. The Tribunal observed in clear terms that the assessee " .:;,. '.!# deliberately concealed the partic~lars of income by f\ot furnishing the true .. " '. ,-' facts and, thus, defied the provisions of law. The Triburlal unampiguously .. .~ '... held that the onus was on the assessee to show that there was no ~} 1 ;~ concealment of income or furnishing of inaccurate particul~rs of his \" income. Further, the counsel for the assessee was unable to demonstrate ,]' .,", ) that the addition of Rs. 1,51,0001- was covered under the KVSS. No ".:" illegality or perversity could be pointed out by the learned counsel for the , assessee to persuade this Court to interfere with the aforesaid findings of the Tribunal.

9.

In view of the above, the substanti~1 questio'n of law is answered against the assessee and the appeal is dismissed. (i March 29, 2011 "7

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →